In this movie, the humans and the machines are at war. The machines have taken over everywhere except for the city of Zion, which is buried four kilometers below the surface. In this world, the machines have created the Matrix, which looks like the real world but it is a trick. A few hundred humans have been "unplugged" and see the real reality, which is dark and barren. The humans find out that the machines are digging to invade that area and they want to stop it.

One group of humans, led by Morpheus, believe in something called the prophecy. They believe that The One (a human named Neo) will save the humans. Another group, led by Commander Jason Lock, believes that the prophecy does not make sense and try to defend Zion with ships and humans.

Neo is called to see the Oracle. After he meets the Oracle, he gets into a fight with Smith. Smith is an old friend of his. He used to be an Agent, which meant that he was very powerful. However Neo defeated him at the end of the first movie. Smith says that he has new powers. He is able to touch someone and that someone becomes part of him. He and hundreds of these clones try to defeat Neo, but they are not very powerful and Neo beats them.

Smith later touches someone named Bane. Now Smith controls an unplugged human, making him very dangerous. As Bane, Smith tries to kill Neo, but another human named the Kid accidentally stops that from happening when he comes to say goodbye to Neo. Later, the humans line all of their ships together. They hope to trigger their EMPs all at once to stop the machines (the EMP kills all electronics within their radius). Smith/Bane, on one of these ships, triggers the EMP before they are supposed to and ruins the attack.

Neo and his crew try to fulfill the prophecy. They pick up a man named the Keymaker. They must get into a special room within a certain time limit. The power must be cut. The machines, which just beat back the surprise attack, attack one of the ships and the power comes back on. Trinity, Neo's girlfriend, gets into the system and turns off the power again.

Neo meets a man named the Architect. He tells Neo that the prophecy is not true and that the machines will destroy Zion. It is The One's job to let it be destroyed and to pick new people to form a new Zion. The One must also touch the source. Neo learns that Trinity is in trouble and will die. Instead of doing what the Architect tells him, he saves Trinity.

Morpheus is not happy that the war is not over yet. He says that the war should have been over when The One touched the source. Neo tells Morpheus what the Architect said. The machines attack the ship that Morpheus, Trinity, and Neo are on. They escape. Neo uses his powers to disable all the attacking machines, but falls unconscious. Another ship picks them up. The movie ends in the ship hospital room, where Bane and Neo are lying.

The response to this movie was big. It made $91 million in its first weekend at the box office, beating out the $50 million record set by Hannibal (2001) for an R-rated movie. Its final total of $281 million in the United States was the highest ever for an R-rated movie until The Passion of the Christ (2004) beat it with $370 million.